The price of a barrel of Brent crude oil has recovered to nearly $70, a 50% gain from its Jan low of $46. Prices have been boosted by evidence that the previous sharp falls have undermined US production, the reversal of some of the earlier dollar strength, a surge in speculative buying, and hopes for a pick-up in demand, particularly from Europe.
OPEC supply is ample, even before any boost from the easing of sanctions on Iran, while US output could quickly rebound. Indeed, the active rig count in the US may soon start to rise again.
Dollar is also likely to resume its climb as the Fed moves closer to raising rates. Finally, the recovery in the euro-zone would be at particular risk if oil prices continue their retracement, especially as they have already risen further in euro than in dollar terms.
"We think that oil prices are now more likely to fall than to rise further over the rest of the year. Our end-2015 forecast for Brent remains $60." said Capital Economics
